Shopping for Health Insurance

While we all hope to be healthy and live a long, fulfilling life, most of us will experience some sort of illness that requires medical care at some point. Though the majority of us won’t need any long-term care, it’s important to arm ourselves with adequate health insurance, just in case.

Why Good Insurance is a Must

The cost of health care is on the rise, making health insurance that much more an important purchase. Many people receive some form of health coverage through their employers, which is automatically deducted from their pay before they even cash their check. If you’re one of those people, are you fully aware of what you’re paying and what you’re getting from your coverage? Check with your employer to learn more about your benefit package.

Shopping for Health Insurance

If you hold a job but don’t get any health insurance as part of your benefits package, you will need to turn to the private health insurance market to get coverage. Shopping around can prove beneficial, because a policy that works well for an individual may not work well for a family. A policy that works well for a family, may not work well for one that’s just starting out. If you’re responsible for buying your own insurance coverage, I’d recommend shopping around across multiple companies instead of going for whatever company you find first.

Key things to look for when comparing plans

It’s easy to get confused about coverage types and premiums because of the sheer volume of options available to the public. When shopping for insurance, keep an eye out for terms like this:

Deductible: The fixed dollar amount the insured pays out-of-pocket within the benefit period before the insurance company starts to pay for covered medical expenses.

Coinsurance: Requires the insured to pay a percentage of the medical bills after deductibles have been paid.

Copayment: The fixed dollar amount the insured pays at the time medical services are received.

Health Maintenance Organization (HMO): A health care system that assumes both health care and insurance risk for providing service, while charging a prepaid fee to participants.

Preferred Provider Organization (PPO): A plan that provides coverage to people who select doctors and hospitals within their network. While participants can go to doctors and hospitals outside the network, they will pay higher fees for using out-of-network providers.

Physician Hospital Organization: (PHO): A network of alliances between doctors and hospitals that is designed to reduce cost and improve healthcare quality.

Flexible Spending Accounts (FSA): Accounts offered by employers that enable people to set aside a portion of their pre-tax income into a savings account meant to cover medical costs not already covered under health insurance. These are typically combined with high deductible and/or catastrophic insurance coverage.

Maximum plan dollar limit: This is the maximum dollar amount the insurance company will pay

Maximum out-of-pocket expense: This the maximum dollar amount the insured will pay out-of-pocket during any benefit period before insurance will cover the rest.

Medical savings accounts (MSA): Savings accounts designated for out-of-pocket medical expenses. The difference between this and a FSA is that MSAs are allowed to carryover end-of-year balances and those balances can accumulate.

As you shop for insurance, don’t be afraid to ask questions about coverage and types. Some insurance plans will include maternity care, which you’ll need if you plan to start or extend your family any time soon. Some insurance plans will add dental and vision coverage for a small fee, and others will require you to purchase those types of coverage separately.